HDFC Bank, M&M from S&P BSE Sensex hit new high

Three companies – HDFC Bank, Kotak Mahindra Bank and Mahindra & Mahindra (M&M) – from the S&P BSE Sensex hit their respective new highs, on the BSE in intra-day trade on Thursday in otherwise range-bound market.

HDFC Bank hit a new high of Rs 2,127, up 4% on the BSE in early morning trade, after its American Depository Receipts (ADR) surged nearly 9% on Wednesday. The stock surpassed its previous high of Rs 2,065 recorded on May 15, 2018 on the BSE in intra-day trade.

According to Business Standard report, the allotment of employee stock options (ESOPs) has created 143 basis points (bps) headroom for FIIs in HDFC Bank. This has created a last minute rush among foreign institutional investors (FIIs) wanting to buy HDFC Bank shares.

Market participants are expecting huge demand for HDFC Bank stock on June 1, when the window opens for FII buying. Brokerage firm Macquarie estimates a volume of $1 billion in the stock, when the window opens on June 1, added report. CLICK HERE TO READ FULL REPORT

M&M, too, hit a new high of Rs 905 in intra-day trade today. In past three trading sessions, the stock was up 6.5% after the company reported a strong 50% year on year growth in consolidated net profit at Rs 11.55 billion in March 2018 quarter (Q4FY18). It had profit of Rs 7.7 billion in the same quarter last fiscal.

M&M remains a key beneficiary of the government's increased focus on rural India with around 70% of core volumes coming from rural India.

“M&M’s margin resilience with good automotive & tractor volume impresses us in Q4FY18; while we expect the market share loss in UVs to be arrested with upcoming new launches. Tractors continue to remain in a sweet spot with the Govt’s increased rural focus. We increase our FY19-20E standalone EPS by 8-10% to factor in higher margins,” analysts at Elara Capital said in result update with reiterate ‘Buy’ rating on the stock with a revised SOTP-based target price of Rs 1,055 from Rs 917.

Kotak Mahindra Bank (KMB) hit a new high of Rs 1,313, gaining 30% thus far in the calendar year 2018. On comparison, the S&P BSE Sensex was up 2.5% during the period.

KMB witnessed a robust performance in profitability in its financial services and life insurance business subsidiaries in Q4FY18. Notably, the Bank owns 100% stake in these subsidiaries. For the first time, the Bank disclosed the Embedded Value of its life insurance business to Rs 58.2 billion; which is relatively higher than the street expectations, according to analyst at Reliance Securities.

KMB has undoubtedly proven its competitive edge over its private sector peers with higher fee income, superior asset quality management and effective management of financial business arms. It continues to witness moderation in SMA-2 balance, which clearly suggests a stable trend on asset quality front. Looking ahead, we expect strong traction in earnings to continue owing to robust growth in loan book, moderate credit cost and healthy margins, the brokerage firm said with ‘buy’ rating on the stock and 12 month target price of Rs 1,396.

Disclaimer: Kotak Mahindra and associates are significant shareholders in Business Standard Pvt Ltd